Oil prices settled more than a dollar lower on Wednesday after Russian oil shipments via the Druzhba pipeline to Hungary restarted and as rising COVID-19 cases in China weighed on sentiment.
Brent crude futures settled a dollar lower at $92.86 a barrel, down 1.1%. U.S. West Texas Intermediate (WTI) crude futures slid by $1.33, or 1.5%, to settle at $85.59 a barrel.
The market gave up early gains after Hungarian Foreign Minister Peter Szijjarto said that flows through the Druzhba oil pipeline from Russia had resumed following a brief outage.
The market later recovered some losses after U.S. crude stocks fell more than expected on the back of heavy refining activity. The Energy Information Administration said U.S. crude inventories fell by 5.4 million barrels last week, compared with expectations for a 440,000-barrel drop.
In addition, tanker-tracker Petro-Logistics said in a report that exports from the Organization of Petroleum Exporting Countries (OPEC) have fallen significantly so far this month.
“Various geopolitical influences – from an oil tanker being hit by a bomb-carrying drone off the coast of Oman, to Russia tensions – are being largely dismissed in favour of a focus on the more bearish elements such as weak Chinese economic data and demand,” said Matt Smith, oil analyst at Kpler.
In China, rising COVID-19 cases weighed on sentiment after an easing of virus restrictions this week.
Meanwhile, Iraq plans to raise its production capacity to around 7 million barrels a day in 2027, state-owned oil marketer SOMO told Reuters, although any increases will be in co-ordination with OPEC.
The International Energy Agency (IEA) forecast demand growth to slow to 1.6 million bpd in 2023 from 2.1 million bpd this year.